Allen & Overy has advised the Government of the Hong Kong Special Administrative Region of the People’s Republic of China (the HKSAR Government) on its issue of USD1 billion sukuk due 2020 in the international capital markets, marking the second issue of sukuk by the HKSAR Government. Allen & Overy had also advised the Joint Global Coordinators, the Joint Lead Managers and the Joint Bookrunners on the inaugural sukuk issue by the HKSAR Government in 2014.
The HKSAR Government chose a Wakalah structure for its second sukuk offering with the underlying assets being Shariah compliant property (through an ijara structure) representing one-third of the issuance price and a commodity murabahah representing the remaining two-thirds of the issuance price, in each case managed by the HKSAR Government as Wakeel. The HKSAR Government is the first AAA-rated sovereign to adopt a Wakalah structure for its sukuk issuance.
The offering was two times oversubscribed and the periodic distribution amount payable on the sukuk is 1.894%, lower than the periodic distribution amount payable on the HKSAR Government’s inaugural issuance in 2014.
The Allen & Overy team was led by International Capital Markets partners Yvonne Siew in Hong Kong and Kenneth Aboud in Singapore with support from Jacqueline Chan and William Leung in Hong Kong and Louise Hennessey in Singapore.
Commenting, Allen & Overy partner Yvonne Siew said: “We are delighted to have once again advised the HKSAR Government on this important second sukuk issuance. Unlike the ijarah structure utilised for the inaugural sukuk issue by the HKSAR Government which requires underlying tangible assets representing 100% of the issuance proceeds, the structure for the HKSAR Government’s second sukuk issuance is ‘asset light’, requiring tangible assets representing just one-third of the issuance proceeds, setting a new benchmark for potential issuers in Hong Kong. ”
Partner Kenneth Aboud added: “We continue to advise on a number of pioneering first sovereign sukuk issuances and are pleased to be once again working with the HKSAR Government on their second sukuk issuance. The success of this deal confirms the continued investor appetite in Asia for Islamic finance transactions, and further confirms our undisputed leadership in global Islamic finance and capital markets.”
Allen & Overy’s Asia Pacific Islamic Finance team advises clients on Islamic finance transactions across a number of practice areas, including capital markets, project finance, banking, derivatives and structured finance, funds and taxation. The Asia Pacific team sits within a premier Global Islamic Finance Group consisting of Islamic finance experts across in the Middle East (Abu Dhabi, Dubai, Qatar and Saudi Arabia) and in Europe (London, Paris and Luxembourg).
In 2015 Allen & Overy won “Best Law Firm” at the Triple AAA Islamic Finance Awards 2015, and was recognised as the “Law Firm of the Year” for the fourth consecutive year at the annual Islamic Finance News Awards in Dubai. The awarding body, Islamic Finance News, cited that “Allen & Overy held its ground to retain the top spot by a comfortable margin, and the breadth of expertise and global stretch of the firm as well as its constant focus on new horizons led to its achievement for the fourth year in a row.”
Our clients come to us for innovative and sophisticated Islamic finance solutions. Recently, Allen & Overy represented the Republic of Indonesia on the update to its US$5 billion sukuk programme and subsequent issue of US$1.5 billion; advised Indonesian national airline, Garuda Indonesia, on its inaugural USD500m sukuk issuance in the international capital markets and was instructed on the USD2.3 billion equivalent Islamic facility to SapuraKencana Petroleum Berhad, a milestone transaction as the largest syndicated Islamic facility in the Malaysian market to date.
